Business Ethics and Corporate Social Responsibility

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Developing an Ethical Framework for Corporations

Companies that implement and follow strong ethical policies typically view ethical business practices as an important business investment. However, the process of creating a fair yet straightforward ethics policy can be challenging. It is important that top management recognize creating an ethical culture/climate throughout an organization makes good business sense. Very simply, an ethical culture teaches employees how to do the right thing (Moore, 2012). Research has shown that a company’s ethical culture, more so than organizational structure, dictates how employees conduct themselves (Weber, Kurke, & Pentico, 2003). The best managers understand their words, actions and decisions set the tone in their companies and impact employee conduct. The decisions managers make, how they make those decisions and how decisions are communicated are key factors in the development of an ethical value system (Weber et al., 2003). It is important that ethical business practices by managers be a priority on par with the desired business goals within an organization.

Implementing and managing company ethics. Companies can manage ethics in their workplaces by establishing an ethics management program. A strong, foundational ethics management program should convey corporate values using codes and policies to guide decision-making and behavior, encourage compliance with existing laws and regulations and include individual employee evaluations and regular, organization-wide assessments to identify new ethical issues and areas of vulnerability (Kerns, 2003). It should be an all-encompassing initiative starting at the top with leaders who are committed to a thoughtful, well-organized code of ethics that benefits an organization at every level (Kerns, 2003). Established standards of appropriate business behavior and written codes of ethical conduct can help trigger internalized virtues that are encouraged and developed at an early age (Kerns, 2003; Moore, 2012). When faced with an ethical dilemma or crisis, it is this internalized moral compass individuals possess, encouraged by employers, that will drive their decision-making behavior in the workplace.

Putting Ethics into Practice in the Workplace

Business leaders need to find practical, straightforward ways to promote ethical behavior within their organizations. There has been extensive writing and conversation from both business leaders and academics about common practices that must be established in a company’s code of conduct. Knowledge gaps about what to do and actual actions of managers and employees need to be addressed in a company’s code of ethics (Kerns, 2003). These kinds of gaps can be closed through case studies, problem solving and study of successful organizations that behave ethically (Kerns, 2003).

Recruiting and employing ethical individuals. Business leaders must become more selective about who joins their companies (Weber et al., 2003). Selecting people for their virtuous values more so than for their skill sets should become a top priority. New employee orientations need to clearly reflect an organization’s ethics and values (Weber et al., 2003). Newly hired employees need to hear managers espouse core ethical values and see those values affirmed through managerial action (Moore, 2012).

Communicating ethics is important. Accountability is necessary when incorporating ethical values into business practices (Kerns, 2003). Top executives must clearly communicate to managers and employees that there will be repercussions for unethical behavior. These need to be clearly outlined in company policies and regulations.

Developing an ethics training and compliance program. It is always good policy for managers to develop an ethics officer position or ethics committee in which an individual or group of individuals is uniquely trained about workplace ethics, policy and procedure training, compliance with existing laws and regulations and conflict and ethical dilemma resolution (Kerns, 2003). These individuals would oversee the development and operation of a company’s ethics management program and ensure compliance with government laws and regulations concerning business practices and corporate misconduct.

Group decision-making is important. Decisions concerning ethics and company conduct should be made in groups with these decisions made public to all company stakeholders (Kerns, 2003). Expectations and concerns of stakeholders must be considered and respected in all company practices. Employees included in the development and operation of their own ethics management program feel a greater sense of participation and ownership in company activities and are more likely to adhere to the core ethical values of the organization (Kerns, 2003; Weber et al., 2003).

Reintroducing Ethics in the Classroom

In light of the recent financial scandals that have plagued Wall Street and hurt the U.S. economy, there needs to be increased scrutiny of how ethics is approached and taught at top business schools (Ruiz-Palomino et al., 2012). There has been significant criticism of business education and its lack of emphasis on teaching ethics to its students (Cavaliere, Mulvaney, & Swerdlow, 2010). Influential leaders both within and outside academia have for more than a decade demanded a critical self-examination of business curricula and a renewed emphasis on teaching social responsibility and ethical behavior in the business world (Bennis & O’Toole, 2005; Piotrowski & Guyett, 2013). As ethics has become increasingly important in business and the workplace, there is greater pressure on colleges and universities to ensure their students graduate with the highest ethical standards. Students, college faculty and business leaders agree that additional ethics courses should be incorporated into the academic curricula at business schools across the U.S. (Piotrowski & Guyette, 2013).

Conclusions

Business leaders are faced with mounting pressure to incorporate the highest ethical standards into their business strategies and also create the largest possible returns for shareholders. Balancing good ethical practices with corporate self-interests can be a challenge for top executives at any company. Unfortunately, putting shareholder return above everything else and abandoning sound ethical practices has led to a number of public and embarrassing lawsuits against major U.S. companies. Business leaders recognize the need for practical, straightforward ethics management programs in their companies that makes ethics a top priority at every level in the organization.